Senior economist, Domain Group

Latest ABS home loan data provided some positive news for the Canberra capital city housing market which has underperformed in the national context for the past two years.

Seasonally adjusted owner-occupied home loans increased by 5.1 per cent over March for the best monthly result since September last year.

Owner-occupied home loans have increased by 10.7 per cent over the March quarter this year compared to the same period a year ago, indicating the impact of low and falling interest rates on the market.

A closer look at the ABS data reveals the increase in March resulted from rising changeover buyer activity. Numbers were up by 13 per cent for the month, an increase of 22.1 per cent over the March quarter compared to last year’s March quarter number.

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First home buyer numbers, however, remain at near record low levels with an increase of just seven loans over the month to a disappointing 87 – the second lowest March result on record for this group recorded in Canberra.

First home buyer numbers have plunged by 36.4 per cent over the March quarter compared to the same period a year ago, reflecting the impact of changes to the Canberra first home buyer grant that came into effect last year.

Residential investor activity in Canberra picked up in March with loan values increasing by 3.2 per cent over the month to be up by 7.6 per cent for the March quarter compared to last year’s March quarter.

Investor activity accounts for 43 per cent of housing loan activity in Canberra with changeover buyers the largest proportion of the market at 50.2 per cent and first home buyers, unsurprisingly, at very low levels accounting for just 6.9 per cent of loans.

Budget forecasts of national rising unemployment and low growth were enhanced by this week’s commentary by the Reserve Bank indicating that interest rates will not be rising any time soon – more good news for the Canberra market.